How does a network externality differ from a traditional positive externality?
A) The person creating a network externality gains from the external benefit generated.
B) The person creating a traditional positive externality gains from the external benefit.
C) The external benefit from a network externality does not increase the value of the network.
D) The external benefit from a traditional positive externality generates even more demand for the good.

Question

Quizplus · Accepted Answer

In a network externality, the value of a product or service increases as more people use it, benefiting the original user or creator. This is different from a traditional positive externality, where the benefit is usually indirect and not necessarily accruing to the creator or user directly.

How Does a Network Externality Differ from a Traditional Positive